8 Florida federal judges had illegal stock ownership conflicts

By Noreen Marcus,FloridaBulldog.org

Eight of Florida’s federal judges had financial interests in one or more of their cases, according to a blockbuster newspaper report that identified 131 judicial scofflaws across the nation.

The Wall Street Journal’s investigation into how federal judges handled 685 lawsuits during the years 2010-2018 has become a hot topic in Congress.

Last Thursday, Sen. Elizabeth Warren, D-Mass., and Rep. Pramila Jayapal, D-Wash., highlighted the “stunning” report in a letter to U.S. Supreme Court Chief Justice John Roberts. They said it will “reduce public confidence in the justice system.”

Soon after the Journal story was published on Sept. 28, Democratic members of the House Judiciary Committee announced they will hold hearings and try to pass legislation to reform the judicial financial disclosure process.

Legal and ethics rules target ownership of individual stocks; mutual funds are considered acceptable. Federal law since 1974 has barred judges from presiding in cases that involve a party in which they, their spouses or their minor children have a “legal or equitable interest, however small.”

EXPERT: RECUSAL THE RIGHT OPTION

In theory, conflicts should be easy to spot. Federal courts use software that finds matches between names of plaintiffs and defendants and lists of companies in which judges or their families are stakeholders.

Once a judge is assigned a case that presents a financial conflict, the correct procedure is self-disqualification, or recusal, according to ethics expert Jennifer LaVia.

“The judge should recuse as soon as the judge knows about the conflict,” said LaVia, a family lawyer in Tallahassee who left a professorship at Florida State University College of Law at the end of 2020.

According to the Journal report:

Six of the eight Florida judges with conflicts had stocks valued at $15,000 or less. The two with bigger holdings, in the range of $15,001 to $50,000, were U.S. District Judge John Steele of Fort Myers and U.S. District Judge Robin Rosenberg of West Palm Beach.

ONE FLORIDA JUDGE HAD 6 CONFLICTS

The other Florida federal trial judges cited were Marcia Cooke of Miami, Roy Dalton Jr. of Orlando, Donald Graham of Miami, Robert Hinkle of Tallahassee, Roger Vinson of Tallahassee and William Hoeveler of Miami, who died in 2017.

With six cases, Cooke had the most conflicts. She also had the most cases, three, in which there were trades of her stocks while the cases were open and active.

Cooke was the only Florida judge who benefited financially from her stock, and that occurred in a single case. Rosenberg was the only other Florida judge with any trades during an active case.

Graham sold his stake (American depositary receipts) in Alcatel-Lucent, a French telecom maker, the day after he approved a $45-million civil settlement between the U.S. Securities and Exchange Commission and Alcatel-Lucent.

The company neither admitted nor denied allegations of bribing foreign officials. After learning about the judge’s conflict, SEC lawyers could have tried to undo the deal, but instead they declined to take further action.

TEXAS FEDERAL JUDGE HAD 138 CONFLICTS

Four of the judges – Cooke, Graham, Hinkle and Rosenberg – responded similarly when the Journal told them about the violations. They had their court clerks notify all the parties involved. They also put public-facing letters in the case dockets stating that their personal or family holdings played no role in their decisions.

But did those actions fulfill their legal and ethical obligations?

“No,” LaVia said. “The requirement is that they not be involved in the proceeding at all. The idea of the rule is to prevent not just the actual conflict, but the appearance of a conflict,” she said. “The problem is we can’t really know, did it affect the judge’s decision or not?”

The Journal unearthed far more extensive violations outside Florida. Judge Rodney Gilstrap, chief of the U.S. District Court for the Eastern District of Texas, set the record for financial conflict cases: 138.

Gilstrap told the Journal “he believed he didn’t need to recuse himself from some cases because they required little or no action on his part, and in other cases because the stocks were in a trust created for his wife.”

EXPERT: IGNORANCE IS AN EXCUSE

Other judges explained they had only minor roles in the conflict cases, such as approving settlements between the parties or moving cases to other courts. Still others blamed clerical errors or misspellings that evaded the conflict-screening software.

“I didn’t realize I had Merck [pharmaceutical company] that early,” U.S. District Judge Roger Vinson of Tallahassee told the Journal. “It was probably something where I didn’t update my recusal lists.”

“Obviously some cases are more concerning than others,” LaVia said. “If a judge is just careless about keeping track and doesn’t really know about a stock, the judge won’t be influenced.

“The ethics rules are important but they’re rules of reason,” she said. “Rules can be misused by an opposing party who just wants a different judge or a second chance. Maybe things aren’t going well. So that’s always a concern.”

Florida Bulldog sent emails seeking additional comment to six of the Florida judges. Five did not respond. Vinson, a senior judge, is no longer listed in the Florida Bar’s lawyers’ directory and could not be located.

I DID NOT ‘BREAK THE LAW’

Judge Roy Dalton’s office gave Florida Bulldog a copy of a letter he sent to the Journal asking for a correction. The newspaper quoted him as saying he didn’t remember the one case but “he suspected he didn’t have the opportunity to screen for conflicts before the parties settled.”

The letter details the timing of when the judge was sworn in, when he was assigned the case and when the parties settled–all within the space of six weeks. At that point, the hundreds of cases on his docket had not yet been screened and flagged for conflicts, he wrote.

“I did not ‘break the law,’’’ Dalton wrote. Apparently he falls into the category of judges who had no knowledge of a conflict and, therefore, no reason to disqualify themselves.

LaVia reviewed the letter and agreed with that assessment. “You kind of think that the readers will think the judge is being sloppy or doesn’t care or is trying to hide something,” she said. “What the Journal printed doesn’t lay it out as well as in his letter.”

As of late last week, Dalton’s office had not heard back from the Journal.